One Friday last August, Tim Sweeney, A billionaire game developer, Sent an email to contact Microsoft: “You’ll enjoy the upcoming fireworks show.”
A week later, Mr. Sweeney’s game Fortnite gave players good news on iPhones: If they complete purchases outside of Apple’s payment systems, they will get a discount on items in the game.
The change violated Apple’s rules and cut the iPhone maker Collecting a commission One of the most popular sports in the world. Hours later, Apple of the Apple Store killed Fortnite.
Mr. Sweeney’s company, Epic Games, Immediately sued Apple In the Federal Court. It also began a public relations affair that went on for months, complete with a trending #FreeFortnite hashtag and a parody of Apple’s iconic “1984”, featuring Apple CEO Tim Cook as an evil corporate with an apple Was shown as the suzerain. Head.
Epic’s attack was Apple’s most direct challenge to power in years, and nine months later, the fight is moving to federal court in Oakland, California. On Monday, a trial is scheduled to open with testimony on behalf of Mr. Sweeney as to why he believes Apple is a monopoly abusing its power.
The test, which is expected to last about three weeks, has major implications. If Epic wins, it will maintain the economics of the $ 100 billion app market and create a way to avoid sending it to millions of companies and developers Up to 30 percent of their app sales To Apple.
Epic’s victory would also fuel opposition to the fight against Apple. Federal and state regulators are investigating Apple’s control over the App Store, and on Friday, European Union accuses Apple With violating the opposing rules on its app’s rules and fees. Apple faces two other federal lawsuits about its App Store fees – one from developers and one from iPhone owners – seeking class-action status.
Beating Apple will also do well for the upcoming trial of Epic against Google on similar issues on the App Store for Android devices. The case is expected to go on trial this year and will be decided by Same federal judge, Yvonne Gonzalez Rogers of the Northern District of California.
If Apple wins, then, it will tighten its grip on mobile apps and curb its growing chorus of critics, further empowering a company that is already among the world’s most valuable and $ 200 billion in sales in the last six months Is up.
The trial will focus on a legal debate over whether Apple is a monopoly. Epic’s lawyers have argued that companies need iPhones to reach customers and Apple unfairly obliges the app to use its payment system and pay their fees.
Apple’s lawyers have responded that iPhones are only one way to reach consumers and that Apple’s fees conform to industry standards.
Legal experts said that Apple has the upper hand. The courts are often more sympathetic to defendants in antitrust trials, as companies have the right to choose with whom they do business.
But Epic is arguing that Apple is using its power to compete, a legal doctrine that “has worked that damage out and gone away”, said William Kovacic, a lawmaker at George Washington University Professor. The Department of Justice made a similar argument against Microsoft in its antitrust suit two decades ago.
The case may come down to a narrow technical question: what is the market fighting over these two? Epic argues that the case is about iPhones and Apple has a clear monopoly over them. Apple advocates emphasize that the market encompasses all gaming platforms – from smartphones to video-game consoles to desktop computers – and Apple hardly has a monopoly there.
The answer will be with Judge Gonzalez Rogers. And when she decides the case, she is set to hear the next two App Store lawsuits demanding class-action status.
An Apple spokesperson said in a statement that Apple’s top executives would reveal how good the App Store was for the world. “We are confident that the case will prove that Epic violated its agreement purposefully to increase its revenue,” he said.
The epic refused to comment.
Fortnite, a battle royale video game, is Epic’s biggest hit in 30 years of business. It got there, in part, because Mr. Sweeney pushed the companies behind the big gaming consoles – Microsoft, Sony Group, and Nintendo, to let players battle each other on different devices, which meant that The owner of Microsoft Xbox can play for the Sony PlayStation owner for the first time.
In 2018, Epic released Fortnite in an iPhone app. In about two years, Epic earned nearly $ 1 billion from Fortnite and its other iPhone apps. But almost 30 percent of this had to be given to Apple. Epic was paying similar commissions to gaming-console manufacturers.
Mr. Sweeney has stated in interviews and on Twitter that he realized that the App Store commission meant Apple and Google could sometimes make more profit on the game than the developers who created it. He saw a chance to challenge the Tech Giants.
Mr. Sweeney Has also said He was paying commissions to companies such as Microsoft and Nintendo because they sold their gaming consoles at a more or less price and relied on commissions, while Apple earned wide margins in all parts of its business.
Other app makers were also beginning to complain about the App Store, but Epic was one of the few with the money, will and freedom to battle in court. While the Chinese Internet giant Tencent bought a major chunk of Epic in 2012, Mr. Sweeney remains the controlling shareholder. Investors recently valued Epic at $ 29 billion.
But Epic is still small compared to Epic. In its latest quarter, Apple generated revenue of about $ 30 billion a month.
“If we turn Apple and Google away from this, in a few years, they are going to expand the monopoly that exercises more power over people and companies,” Mr. Sweeney said in an interview. Last year.
In 2019, Mr. Sweeney decided to face Apple. Epic hired law firm Cravath Sven & Moore, tapped a public relations consultant, assigned 100 to 200 employees to the project, and Formed an alliance with other app makers “To make sure we’re not just voices,” according to an Apple court filing. Epic named the effort Project Liberty.
Last June, Mr. Sweeney emailed Mr. Cook and some of his colleagues to ask them to leave a competing marketplace for the game on the iPhone and use Epic’s own payment system instead of Apple’s, making Apple’s 30 Be able to prevent a percentage reduction.
Apple’s lawyers responded, writing that the company would not turn the App Store “into a public utility.”
Mr. Sweeney dropped sibility in his response. “It is a sad state of affairs that Apple’s senior executives would earnestly beg Epic to respond to such self-righteous and self-serving screws from Epic’s legal team,” he told Min. Wrote to Cook. “We will continue this even further, as we have done to address other injustices in our industry.”
Three weeks later, Mr. Sweeney sent his forecast for fireworks, according to an apple court filing.
Since then, lawyers for Epic and Apple have been filing court stories and telling different stories to journalists.
Apple has said that it has developed a world-changing product on the iPhone which has led to an “economic miracle” in mobile applications. The company said Apple has spent billions of dollars developing the iPhone and another $ 100 million dollar on its App Store, and charging commissions on the sale of the app is partly how it restores investment And protects apps.
Epic acknowledged that Apple’s commissions for security are too low. Epic hopes to call witnesses from other companies who testify to their experiences with the App Store, including an executive in the Match Group, which makes dating app Tinder. An executive on Facebook who is locked inside Their own quarrel with Apple, Was scheduled for testimony, but dropped out.
Apple has accused Epic of looking for a free ride. The game makers have not gone after other companies that distribute Fortnite. Microsoft, Samsung, Sony and Nintendo all charge the same commissions according to the game A study funded by Apple. It was not noted in that study Apple popularized the 30 percent rate In 2008 with the App Store.
In response, Epic has hinted for a commission to charge in its own marketplace for game developers: 12 percent.
After suing Epic, Apple Halved its commission 15 percent for developers who make less than $ 1 million on their apps. According to estimates by app data firm Sensor Tower, the new rate applies to about 98 percent of developers who paid Apple’s commission.
Yet this hardly affects Apple’s bottom line. According to Sensor Tower, more than 95 percent of Apple’s app revenue comes from companies paying the full 30 percent rate.